Correlation Between Blade Air and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Blade Air and Rocket Lab at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Blade Air and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blade Air Mobility and Rocket Lab USA, you can compare the effects of market volatilities on Blade Air and Rocket Lab and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Blade Air with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blade Air and Rocket Lab.
Diversification Opportunities for Blade Air and Rocket Lab
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Blade and Rocket is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Blade Air Mobility and Rocket Lab USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Lab USA and Blade Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Blade Air Mobility are associated (or correlated) with Rocket Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Lab USA has no effect on the direction of Blade Air i.e., Blade Air and Rocket Lab go up and down completely randomly.
Pair Corralation between Blade Air and Rocket Lab
Given the investment horizon of 90 days Blade Air is expected to generate 5.94 times less return on investment than Rocket Lab. But when comparing it to its historical volatility, Blade Air Mobility is 1.46 times less risky than Rocket Lab. It trades about 0.1 of its potential returns per unit of risk. Rocket Lab USA is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 609.00 in Rocket Lab USA on August 28, 2024 and sell it today you would earn a total of 1,797 from holding Rocket Lab USA or generate 295.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blade Air Mobility vs. Rocket Lab USA
Performance |
| Timeline |
| Blade Air Mobility |
| Rocket Lab USA |
Blade Air and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blade Air and Rocket Lab
The main advantage of trading using opposite Blade Air and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blade Air position performs unexpectedly, Rocket Lab can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rocket Lab will offset losses from the drop in Rocket Lab's long position.| Blade Air vs. Grupo Aeroportuario del | Blade Air vs. Auckland International Airport | Blade Air vs. Aeroports de Paris | Blade Air vs. Aena SME SA |
| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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